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August 15th, 2014

NSR—HTS in Energy Markets: A Zero-Sum Game? (Analysis | Report)

[SatNews] As more High Throughput Satellites (HTS) launch, arrive in orbit and become operational in the next 12 to 18 months, many in the industry are asking, “How will HTS affect [insert market here]?”

For consumer markets in North America, and Europe to a lesser extent, HTS can and does have a role to play in consumer broadband access.  For “Enterprise” applications, there is definitely a role for HTS.  And, for Mobility.  And, for… But will this mean it’s a zero-sum game between FSS and HTS players? 

In  Energy markets—Oil & Gas, Mining, and Electrical Utilities—HTS will not in-itself be a ‘revolution,’  but rather a continuation of what fixed satellite service (FSS) providers know and are already providing: CIR-based offerings with strong SLAs.  HTS will be add fuel on the capacity fire but that fire was already started before due to real-time video monitoring reaching everywhere and anywhere, business operations becoming more sophisticated, and crew services a key service. Combined, all these applications were already driving demand in this market..  

As NSR found in its Energy Markets via Satellite, 4th Edition, HTS-based services will not be a ‘year-zero’ adoption, but rather a steadily growing opportunity as end-users become more familiar with the technology.  End-users continue to care more about making their network work than adopting the latest and greatest technology… or even price for some sub-markets within the energy vertical.

FSS users in C- and Ku-bands will continue to require more Gbps to end-users through 2019, the year of the inflection point between GEO-HTS and FSS C-band… but not the death knell for FSS C-band.  Instead, it is where end-users and service providers will see the uptake of GEO-HTS services surpass a flattening demand for FSS C-band.  2022 will be another key point in the curve, where GEO-HTS uptake in terms of Gbps of demand from end-users will surpass FSS Ku-band.  Put another way—by 2023 more than 50 percent of total capacity demand in Gbps from Energy End-users on VSAT networks will be delivered by HTS-based services (both in GEO and MEO orbits.)

For MEO-HTS, the story is fairly simple—lower latency and higher throughputs are an appealing value proposition, but it all comes down to three things as in real estate: location, location, and location.  End-users located in the sweet-spot of announced coverage for MEO-HTS offerings (+/- 45 Degrees) AND with enough real estate for a couple of 1.2M+ VSATs AND with significant capacity demands will find MEO-HTS offerings an appealing service.  Those more mobile or those with less space or those with lower capacity demand will face a less attractive cost-benefit analysis.  One thing is clear though for MEO-HTS offerings, ignoring all other aspects: lower latency definitely has a place.

GEO-HTS is another story.  With different frequencies, technologies, “Open vs. Closed” ecosystems, etc., it is harder to pick specific ‘winners and losers.’  However, at a macro-level HTS will be a key enabler for delivering and powering the on-going digitization of and connected-devices in the Energy markets.  Each GEO-HTS offering will have a role to play within the energy market – enabling ‘office’ connectivity at remote locations, or global mobility, or backwards capability.  One thing is clear amongst all of the GEO-HTS offerings, a focus on CIR-based services with high SLAs will be key to getting energy end-users to adopt the technology.  And, only time will allow the ‘proof’ that most sub-markets within the energy industry require to be made. 

With the promise of lower cost per bit, and/or lower latency from HTS-centric offerings… what does FSS continue to bring to the table?  Within the emerging ‘middle bandwidth’ markets for SCADA + video monitoring sites (such as pipeline compressor stations, or utility sub-stations) the advantage of lower prices is relatively moot.  As equipment and services comprises a larger share of the pie relative to straight capacity expenditures, and a lengthy process to get technology certified to operate either with grid operators or in hazardous conditions there remains plenty of life left for FSS in these volume-based markets.

In higher bandwidth markets such as Offshore E&P, reliability and availability is paramount.  Meaning, end-users will continue to leverage FSS C-band offerings in areas with higher incidents of rain-fade… rather than risk downtime.  For these end-users, it will not be an either or solution, but rather a hybrid approach to maximize throughput AND availability, while managing costs at the same time.

With more than three-quarters of capacity demand coming from the Oil & Gas Exploration and Production over the next ten years in the Energy markets, the satellite industry will need to keep looking at advances in real-time drilling, sub-sea technologies, and crew welfare trends to continue to match the right technology to the right problem.  GEO-HTS or MEO-HTS is not the “everything, everywhere, everyone” solution for Energy markets.  FSS C-band and FSS Ku-band will continue to have their place in the “HTS era,” but it is not a zero-sum game.

To learn more about NSR's Energy Markets via Satellite, 4th Edition, please visit

Story by Brad Grady, Senior Analyst, NSR USA